Market musings

Tips on Scaling Your Business Without Hiring

by Sasha Viasasha
July 12, 2017

Hiring may be one of the most recognizable indications of business growth, but it’s not the most accurate or the even the best idea, in many cases.

Investopedia defines a growth company as one that “generates significant positive cash flows or earnings, which increase at significantly faster rates than the overall economy.”

As most industries and the global economy are stuck in a 0 to low growth mode for the foreseeable future, you may already be a high-growth company without even knowing it. The point is: Growth and headcount are different things.

In reality, scaling your business safely takes a massive sustained effort along several fronts, including a substantial reinvestment into business operations to keep the momentum going.

Uneven growth from scaling too fast was identified as the No. 1 threat to small businesses according the Startup Genome Report.

This large-scale study of winning growth strategies found that 90% of startups failures resulted from avoidable, self-destructive actions -- not the lack of eager customers or intense competition. Scaling too fast is the largest component of that number, responsible for 74% of all failures.

On the positive side, the small companies that learned how to scale intelligently were able to grow 20X faster than average.

Balancing 5 Dimensions in Scaling Your Business

The report concluded that your business can scale carefully, yet maximize growth speed by balancing advances in these five core dimensions:

  • Team
  • Customer
  • Business Model
  • Product
  • Financials

The art of high growth is keeping these dimensions moving together in concert. The authors warned that, “Most startup failures can be explained by one or more of these dimensions falling out of tune with the others.”

Here are five tips on scaling in each area without the in the chaos and obligations of adding new people into the mix:

Scale the Team

When business owners get overwhelmed, many feel that they should hire new employees to take over some portion of their responsibilities. But adding workers doesn’t always lighten the workload.

In an earlier blog, we reviewed Brook’s Law of project management that explains why “Adding manpower to a late project makes the project later.” New people add new expenses, more communication channel complexity, more management difficulties and team coordination slowdowns.

Instead of hiring, cross train your existing workforce to pick up where others leave off. Work on team building to reduce operational friction. Put technologies in place that can automatically share out the work more intelligently.

Scale the Customer

Too many customers sounds like a great problem to have, but it can be brutal in the real world. When you accept more customers than you can serve with an excellent experience, you're just nurturing them over to the competition.

Self-serve customer service, offered via online tools and training videos, can relieve a great deal of the pressure, but you can also prepare everyone on staff to be a de facto customer service agent. That's how Zappos went from $0 revenue to a $1.2 billion valuation in 10 years.  

Zappos CEO Tony Hsieh explained, “Every employee is empowered to do anything. It’s about being able to do a lot more experiments and iterate very quickly.

Scale the Business Model

The Ray Kroc strategy is instructive in learning how to scale through simplification of the business model. Kroc was the popularizer of McDonalds and the subject of the film The Founder. His plan was to emphasize a universal eating experience and predictable meal consistency from the start so that it could be (and was) taken around the world.

It’s more realistic to hit a consistent delivery quality level when you streamline your set of services or items to only the very best. Part of this strategy involves the often painful realization that everyone should be replaceable, even the CEO.

Identify any resource constraints in knowledge that is limited to one group or a single individual and open that up to the entire organization to see a more stable, controlled growth rate.

Scale the Product

There are two types of companies: those in the feature business and those in the customer business. The feature business refers to companies on endless quest to add value by adding features. They end up being judged by how many features they add on, how tight the feature adding schedule is, and how flawlessly those feature work.

Apple, once the paragon of simplicity, is getting stuck in the feature trap now. At their developer conference this year, the New York Times reported, “As Apple prepares to show off new features for the iPhone and other devices at its developer conference on Monday, the company is grappling with an uncomfortable issue: Many of its existing features are already too complicated for many users to figure out.”

Instead, Rory O’Driscoll from Scale Venture Partners recommends simplicity and quality, dialing up the concentration on one thing that matters most to your core customers. “To get any traction in software today you have to start with a feature — an atomic unit of delight. You have to solve one problem superbly.”

Scale the Financials

A growing company can’t always get all the reinvestment capital it need from sales revenues. Even when you have the profits to do that, sometimes it makes more sense to find additional funding sources.

Kevin O'Leary, Founder of the O'Leary Financial Group, has often advised business owners to stay far away from personal debt, but that business debt is a different animal. He wrote, “Far too many business owners fear debt and think that by taking on debt they're admitting that their business has problems. What they don't understand is that the value of debt is determined by how you use it.”

It worked for him. He said, “I owe most of my success to a $10,000 loan my mother Georgette offered me back when I was running my first business out of her basement. I later sold the same business for $4 billion.”

Scaling Your Business Is a Juggling Act

The TL;DR:

Three quarters of small businesses that crash and burn when they try to scale too quickly or unevenly. Others grew 20X faster than the competition, and they tended to follow these five tips:

  • Cross-train before you hire
  • Empower everyone who works for you to be a customer service expert
  • Deploy the tech to make all processes consistent and all knowlege sharable
  • Simplify what you are best at doing and do it better
  • Reinvest from smartest funding source considering the Time Value of Money (TVM)

Now is actually a great time to grow a business, despite the turbulent global economy, because new tech makes it easier than ever before to run a major operation on a smaller investment. Contact us for a demo of Spoke's business phone system that instantly creates a professional, scalable customer interface for any grow-oriented SMB. 

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